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Morgan's rebels cite 'failure of leadership'

The shake-up at the top of Morgan Stanley has failed to quell a rebellion by former executives who are threatening to step up their campaign against chief executive Phil Purcell.

The investment bank said earlier this week it had appointed its chief administrative officer Stephen Crawford and fixed-income head Zoe Cruz as co-presidents.

But a group of eight former executives who remain shareholders believe the changes do not go far enough. They wrote to the board earlier this month expressing concern at the bank's under-performance and called for dramatic changes. Purcell has come under pressure due to a slide in the bank's credit card and retail brokerage businesses.

The reorganisation has forced out Stephan Newhouse, once the most senior banker at Morgan Stanley's European operation and latterly global president; Vikram Pandit, head of the institutional securities business; and John Havens, head of the institutional equity division.

It is believed that Pandit was lining himself up to succeed Purcell. On Tuesday Morgan Stanley declined to comment on the future of the three at the bank, but it is believed that Newhouse has been offered another position and the other two have left.

According to sources at Morgan Stanley, the executive board considered the complaints at three meetings. It also asked Purcell to establish a succession plan, and improve the integration of the firm's three main businesses.